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GPF List-Serv
September 18-22, 2000Greetings from Global Policy Forum!
The other day, a visitor from the French-based ATTAC movement stopped by the GPF office. ATTAC works to promote the Tobin tax on international currency transactions - and to achieve democratic citizens' control over global economic policy. Our visitor told us that international public support for ATTAC's work has been growing rapidly, that branches have now been established in 19 countries, and that parliaments are now showing increasing interest. We are pleased, because GPF has always supported the idea of global taxes - both as policy tools and as revenue-raising devices. Our web site, which supports the world's largest assemblage of materials on the subject, won an award last year and we think it has helped push the movement along.
No one knows exactly how much currency changes hands each day, but well-informed economists think that about $1.7 trillion changes hands every day, enough to cover the foreign exchange needs of world trade in less than a week. The remaining 51 weeks of trading relate to arbitrage (trading to take advantage of small differences in pricing or interest rates) and speculative currency runs, such as those that badly damaged the Asian economies in 1997-98. Nearly thirty years ago, US economist James Tobin proposed a small tax on all currency transactions as a way to "put sand in the gears" and dampen speculation. The rate of currency trading has increased enormously since Tobin first raised the idea, so each year that passes it is more urgently needed than ever.
Even blue-chip institutions such as the Bank for International Settlements and the OECD have expressed concern at the amount of money sloshing around the globe - flows that some day might overwhelm the capacity of central banks to limit the damage, leading possibly to a general meltdown. As one crisis has followed another in the past five years, this concern has grown. A senior BIS official admitted privately at a New York luncheon recently that a meltdown is a real and worrisome possibility, leading to the end of the financial system "as we know it."
The Financial Stability Forum, set up by the richest countries under the leadership of the BIS, issued three reports last spring, warning about the effects of these gigantic, unregulated international flows of funds and two closely-related issues - "highly-leveraged institutions" (hedge funds and the like) and unregulated offshore financial centers. Our friend Peter Wahl of WEED in Germany and his colleague Peter Waldow wrote an excellent critical statement on these reports, pointing out their timid and completely inadequate approach to the problems, as well as their fundamentally undemocratic perspective (www.weedbonn.org/finanzmaerkte/fsf_e.htm). Still, if we read between the lines of the FSF reports, we discover the disturbingly unstable and risky nature of the global financial system and the disquiet of those that have responsibility for making it run "smoothly."
Next week we will take up this question again and look especially at the offshore phenomenon, as billions from tax avoiders, tax evaders and criminals accumulate daily beyond the scrutiny of the regulators, but with the connivance of money center banks and financial authorities.
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